Senate Passes 9/11 Bill That Would Force Saudi Arabia to Dump $750B in Treasuries

Oh boy, another possible trigger to the collapse of the US bond market. Today, the Senate unanimously passed a bill that would expose the Saudi Arabian government to lawsuits by victims of the 9/11 attacks. Saudi Arabia has threatened to dump its $750B worth of US government bonds if this were to happen. That, well, sort of hints that the Saudi Arabian government is partly responsible for sponsoring 9/11, otherwise they wouldn’t care.

President Obama, whose first responsibility is protecting his own ability to borrow ad infinitum in the bond markets to fund his socialist paradise spending schemes, has threatened to veto the bill because he doesn’t want the Saudis to dump the bonds and send his borrowing costs through the roof with a $19 trillion debt hanging over his head.

So to hell with 9/11 victims and their families, he’s going to protect a muslim government responsible for more public beheadings than ISIS.

But here’s the interesting part. It looks like the Senate and House will successfully pass the bill over Obama’s veto. It was already passed unanimously, and nobody, no Republican or Democrat or whatever other silly label or letter they put after their names, wants to vote against this bill because everyone knows that it should pass. The politicians on Capitol Hill aren’t even aware that this could really crash the bond market. Here’s NYT:

Senator Chuck Schumer of New York, a Democrat and bill sponsor, said the legislation would help the families of the victims seek justice. “For the sake of the families, I want to make clear beyond the shadow of a doubt that every entity, including foreign states, will be held accountable if they are found to be sponsors of the heinous act of 9/11,” he said shortly before the bill passed.

“If the Saudis did not participate in this terrorism, they have nothing to fear about going to court,” the senator said. “If they did, they should be held accountable.”

Mr. Schumer also said he believed Democrats would override a veto from Mr. Obama.

He said he believed Saudi Arabia’s threat to pull its assets, a concern of the administration, was “hollow,” adding, “It will hurt them a lot more than it hurts us.”

Where Schumer is wrong is that it’s not a hollow threat. It’s not like the Saudis would have a choice. Once they become open to lawsuits, their treasuries become collateral and can easily be confiscated by US courts no problem. The Saudis would be forced to sell everything before that could happen. It’s not a threat, but a necessity.

Hey, if the tax spender in Congress want to really jack interest rates higher and bankrupt themselves, go for it. They need two thirds to override Obama’s veto, which will come. They already have unanimity, so two thirds doesn’t seem all that difficult. It’s not exactly an uphill battle.

 

Model Portfolio Update

For anyone who has been following my trading game, the model portfolio is way up. See the model portfolio page on the menu bar. I closed the SPY call option position for a small loss. The contracts expired in the money, but not enough so, so we took a $480 loss. I added one contract of SRPT January 20, 2017 $50 CALL for $190. The big FDA decision on Eteplirsen is due in 10 days, and there is a chance it will be approved. If it is, that contract will become much more expensive.

Since everyone is focusing on options expiring next Friday since the FDA decision will be in by then, the longer dated calls are at a significant discount, so I bought one.

Total notional gains for open positions in the model so far are $19,000 flat plus realized gains from closed positions of $2,480, for 21.5% gains so far. Each individual position is as follows.

Portfolio began 9/21/15.

Open Positions As of January 5, 2016

$5,000 QQQ at $99.97/share – ADDED 1/20/2016, current gain $341.

$9,000 CVX at $76.97/share w/5% dividend – ADDED 1/20/2016, current gain $2,938.

$500 GLD JAN 2017 225 CALL  @ $0.13/contract  – current loss $154

$10,000 CORR at $25.80/share w/9% dividend – current loss $1,143

$10,000 CORR at $15/share with 17.7% dividend – ADDED 12/29/15 – current gain $5,220

$500 TLT JAN 2017 $95 PUT @ $3.00/contract – current loss $500

$30,000 GG at $13.40/share w/1.1% dividend – current gain $11,574

$10,000 POT at $17.80/share w/8.54% dividend – ADDED 12/29/15 current loss $1,033

$10,000 888.L at $2.72/share (183.5 pence) – ADDED 12/29/15 current gain $1,757

$190 SRPT Jan. 20, 2017 $50 CALL – ADDED 5/16/16

$17,330 CASH

Total notional gains $19,000 flat

Closed Positions

$20,000 CVX at $78/share w/5.5% dividend – SOLD 10/8/15 AT $89.72/SHARE FOR $23,000

$3,000 SPY APR 15 2016 203 CALL @ $5.95/contract – CLOSED 4/15/16 FOR $2,520

TOTAL As of May 16, 2015 – $121,480.

Total realized gain 2.48%, Total notional gains 19%.

Rounding down for commissions.

Additional information: This is a game, and I am making no recommendations.